Portside prices of South African RB3 (4800 NAR) thermal coal have come down by INR 300-400/t in a month’s time and are currently assessed at INR 12,300-12,400/t ex-Vizag, while at Mangalore prices are assessed at INR 12,500/t. Prices exclude cess and GST.
The demand for RB3 coal has been subdued since the past few weeks as there was not much movement in the domestic sponge iron market. There were limited trades for sponge iron as buyers had booked sufficient orders for December and were in a holiday mood; so they held their bids and made only need-based purchases.
However, with the market opening yesterday post holidays, sponge iron prices have recovered by INR 200-500/t due to optimism in the market and are currently assessed at INR 32,600/t exw-Raipur.
Billet and semi-finished steel prices have also recovered in line with the optimism in the exports market. But this didn’t have any major impact on RB3 prices so far as market participants believe that the optimism in the steel market is temporary and real demand continues to remain slow.
In addition, many sponge iron units are blending Australian 4600 NAR grade coal with RB3 as the former is available at cheaper rates. Prices are assessed at INR 9,500/t (excluding cess and GST) ex-Krishnapatnam.
Imported South African coal prices fall
Over the past month, RB1 (6000 NAR) grade coal prices have come down by $63/t and are currently assessed at $190/t. The drop has come amid sluggish demand from Europe and other markets.
The majority of countries were stocked up for winter and there were no supply disruptions in key coal exporting countries in December. These factors weighed on prices.
Imported RB3 grade thermal coal prices have fallen by $10/t m-o-m at $120/t FOB RBCT port. The panamax freight between the two countries is currently assessed at $15/t.
Outlook
Portside prices for RB3 grade coal are expected to remain stable or may even go higher amid positive sentiments in the sponge iron and steel markets. However, any significant increase seems unlikely as imported thermal coal prices are expected to fall in the coming weeks due to sluggish global demand.
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